Firestone Tyre & Rubber Company, Ltd v Lewellin (HM Inspector of Taxes)
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE BIRKETT |
| Judgment Date | 13 February 1956 |
| Judgment citation (vLex) | [1956] EWCA Civ J0213-1 |
| Court | Court of Appeal |
| Date | 13 February 1956 |
[1956] EWCA Civ J0213-1
In The Supreme Court of Judicature
Court of Appeal
The Master of the Rolls
Lord Justice Jenkins
Lord Justice Birkett
Appeal of Appellants
SIR JAMES MILLARD TUCKER, Q.C. and Mr. G. G. HONEYMAN, C.B.E., Q.C, (Instructed by Messrs. Lovell, White & King, Sergeants Inn, Fleet Street, London, E.C.4) appeared as Counsel on behalf of the Firestone Type and Rubber Company, Limited,
THE RIGHT HONOURABLE SIR FRANK SOSKICE, Q.C., M.P. and SIR REGINALD HILLS (instructed by the Solicitor of Inland Revenue, Somerset House, Strand, W.C 2) appeared as Counsel on behalf of H.M. Inspector of Taxes.
It may be truly said as a general proposition that the bulk of those who are liable to pay income tax are the subjects of Her Majesty resident in the United Kingdom, But there are some few; cases in which persons not subjects of Her Majesty, and not indeed resident in the United Kingdom, may pay the tax. Thus, to refer to the Income Tax Act which is appropriate to this case, the Income Tax Act 1918, Schedule D, paragraph (1) of that Act provides; "Tax under this Schedule shall be charged in respect of (a) The annual profits or gains arising 02 accruing… (iii) to any person, whether a British subject or not, although not resident in the United Kingdom… from any trade, profession, employment, or vocation exercised within the United Kingdom".
That tax liability of foreign non-residents is qualified and governed as regards assessment by certain of the General Rules - and again I refer only to those material to the present case - applicable to Schedules A, B, C, D and E. Of those Rules it will be sufficient to read Nos.5 and 10, which have assumed their present form as successors in title (as it were) of the original Income Tax Act 1842 as amended by the Act of 1915. Rule 5 says, "A person not resident in the United Kingdom, whether a British subject or not, shall be assessable and chargeable in the mime of any such trustee, guardian, tutor, curator, or committee, or…" - and these are the more important words - … of any factor, agent, receiver, branch, or manager, whether such factor, agent, receiver, branch, or manager has the receipt of the profits or gains or no';, in like manner and to the like amount as such non-resident person would be assessed and charged if he were resident in the United Kingdom and in the actual receipt of such profits or gains" But Rule 10 says, "Nothing in those rules shall render a non-resident person chargeable in the name of a broker or general commission agent, or in the name of an agent not being an authorized person carrying on the regular agency of the non-resident person or a person chargeable as if he were an agent in pursuance of these rules, in respect of profits or gains arising from sales or transactions carried out through such a broker or agent".
From the paragraphs in Schedule D which I have read, and the two Rules, it follows that in the case of an attempt to tax, via a "regular" agent, a non-resident person, two requirements must be shown to be satisfied - first, the non-resident must be not merely trading with the United Kingdom but exercising, that is carrying on, a trade or profession within the United Kingdom; and, second for the purposes of that trade there must be what is called an authorized person as regular agent of the non-resident trader.
The claim to Income Tax in the present case relates to the five tax years 1940/41 to 1945/46 Inclusive. That was a period of severe war time restriction in this country upon trading between the United Kingdom and foreign parts. That matter I have mentioned because it has, as will be seen, some bearing upon this case.
The non-resident sought here to be taxed is a company known as the Firestone Tire and Rubber Export Company, being a company incorporated, I think, in the State of Maine but having its principal place of business in the city of Akron in the State of "Ohio in the United States. I will call that company, hereafter, "Akron".
The alleged regular agent which is to be taxed on behalf of the non-resident Akron Company is an English company known as the Firestone Type., and Rubber Company Limited, whose factory and offices and place of business are at Brentford in the environs of London. That Company I will refer to as "Brentford". Brentford is in fact wholly controlled, as the learned Judge pointed out, by Akron; but I agree of course with Sir James Tucker that you cannot disregard the effect of the separate legal entity which Brentford is you cannot answer the question raised in this Appeal by treating Brentford as though it were a mere emanation of Akron.
Having named the two corporations with which we are concerned the questions which we have to decide in the sense that I have anticipated, after my reference to the Income Tax Act and the Rules, can now be restated in the terms in which I find then in Paragraph 2 of the Case Stated. "The questions," said the Commissioners, "for determination before us were as follows." - I leave out (a) ". (b) whether Akron was exercising within the United Kingdom a trade of selling tyres to persons outside the United Kingdom; and, if so, (c) whether that trade was carried on by Akron through the agency of Brentford".
It is a trite observation that in every case which comes before the Courts the answer in the end must depend upon its particular facts. The facts of the present case are undoubtedly in many respects special and peculiar. As Sir James Tucker said, the old cases in which the question of taxing non-resident persons came before the Courts (for example, the cases compendiously referred to as the "champagne" cases) were cases, generally speaking,- where the non-resident sold here in the United Kingdom goods made abroad and it was in particular reference to the cases of that type that Lord Cave, when Lord Chancellor, in the case of MacLean Company v. 'Escort used language which has been quoted many times before, as it has been quoted in the present. case, and which I will now read again from pages 574/5 of 10 Tax Cases "The question", said the Lord Chancellor, "whether a trade is exercised in the United Kingdom is a question of fact, and it is undesirable to attempt to lay down any exhaustive test of what constitutes such an exercise of trade but I think It must now be taken as established that in the case of merchant's business, the primary object of which is to sell goods at a profit, the trade is (speaking generally) exercised or carried on (I do not myself see much difference between the two expressions) at the place where the contracts are made. No doubt reference has sometimes been made to the place where payment is made for the goods sold or to the place where the goods are delivered, and it may be that in certain circumstances those are material considerations; but the most important, and indeed the crucial question is, where are the contracts of sale made?".
This case is on its facts very different in material respects from the type of case exemplified by the "champagne" cases. Indeed, In some respects it may be said to be the converse of them, since the goods here in question were made in the United Kingdom and were then sold abroad.
I turn to a statement of what I will call the Akron business. I find it in (and I cannot I think do better than quote it from) Paragraph 4 of the Case Stated, which constitutes a finding of fact by the Commissioners. "Akron, an American Corporation registeredin Akron, Ohio, is the head of a world wide organization consisting of a large group of corporations operating in America and in various parts of the world. Some of its associated and subsidiary corporations manufacture and sell tyres in the countries in which they are registered and others sell, in the countries in which they are registered, tyres which have been manufactured in America or by subsidiary corporations in other countries.
Whether the particular company sought hero to be taxed, Firestone Tire and Rubber Export Company, themselves manufacture tyres is not a matter which appears to be proved in evidence, but I assume - and I base myself upon the finding of the Commissioners - that this Company is at any rate a member of, and an important member of, the general Akron organization; and the business of that organization is that of the marketing and distribution of Firestone tyres and other Firestone products. I observe that Firestone tyres are branded articles. The name Firestone, besides being in fact a trade mark, is part, and a valuable part, of the goodwill of Akron. I assume also that tyres which bear that mark as a guarantee of the reputation of Firestone are made in accordance with some particular process, whether patented or not, and that process again is part, and a valuable part, of the business undertaking and property of Akron.
The distribution of Firestone products outside the United States, and particularly in Europe, appears to be conducted by Akron through distributors under "distributor" agreements. I shall refer presently to the one which we have taken as a sample. But the substance of the obligation put upon such a distributor was that they were bound to promote the sales in their countries of Firestone products and not to sell any competing products themselves at the same time.
In order that such a distributor should get supplies, Akron have also established, as the Case, where I have quoted it, mentions, as part of their organization controlled manufacturing companies (of which Brentford is one) whose function it is to make Firestone tyres and Firestone products according to the strict directions and specifications of Akron, and to dispose of those tyres subject to, and only subject to, the terms imposed...
To continue reading
Request your trial
-
G C A International Ltd v Yates (Inspector of Taxes) ; Yates (Inspector of Taxes) v G C A International Ltd
...Seng Bank Ltd TAX[1990] BTC 482 Edwards (HMIT) v Bairstow & Anor ELR[1956] AC 14 Firestone Tyre & Rubber Co Ltd v Lewellin (HMIT) TAX(1957) 37 TC 111 Smidth (FL) & Co v Greenwood (Surveyor of Taxes) TAX(1921) 8 TC 193 Corporation tax - Double taxation - Unilateral relief - Taxpayer contract......
-
Alloway v Phillips (HM Inspector of Taxes)
...v. Stainer's Executors 32 TC 367; [1952] AC 280; Higgs v. Olivier 33 TC 136; [1952] Ch 311; Firestone Tyre & Rubber Co., Ltd. v. Lewellin37 TC 111; [1957] 1 WLR 464;Evans Medical Supplies, Ltd. v. Moriarty 37 TC 540; [1958] 1 WLR 66; Bradbury v. Arnold 37 TC 665;Bloom v. Kinder 38 TC 77; Ho......
-
Adams v Cape Industries Plc
... ... Ltd. ("TCL"), a South African company. (J.4A) ... 45 2. The asbestos mines were in ... in the USA; earned profits; and paid US taxes thereon. NAAC's creditors and debtors were its ... in Dunlop Pneumatic Tyre Company v. Actiengesselschaft fur Motor Und ... In Firestone v. Llewellyn (1957) 1 W.L.R. 464 (which was ... ...
-
Alloway v Phillips
...of its own. 38 Reliance for this proposition was placed on three House of lords cases, Firestone Tyre & Rubber Co. Ltd. v. Lewellin 37 Tax Cases 111, Purchase v. Stainer's Executors 32 Tax Cases 367, and Carson v. Cheyney's Executor 38 Tax Cases 240. Special reliance was placed on the speec......